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Debating Social Democracy

January 6, 2010 3:06 pmJanuary 6, 2010 3:06 pm

Responding to Jim Manzi (and myself) on the subject of Europe’s falling share of global G.D.P., Jon Chait points out that the gap between America’s economic performance and Europe’s over the last 30 years narrows dramatically if you look at G.D.P per capita, rather than just at overall economic growth. In other words, much of the widening gap between the U.S. and European shares of global G.D.P. can be chalked up to America’s population growth since the 1970s, rather than increasing per person wealth.

In response, Manzi makes the sensible point that his essay (like my column, which quoted from it) was focusing on America’s position on the global stage as well as our domestic situation, and when it comes to global politics the sheer size of your economy — and not just your per capita wealth — matters a great deal. On a per capita basis, after all, the richest countries in the world include Singapore, Qatar and Brunei, which nobody would confuse with great powers capable of playing a significant role in promoting stability, liberty and growth — or exerting significant cultural influence, for that matter — on the world stage. (Taiwan’s impressive per person G.D.P., Manzi points out, does not prevent it from being swallowed by mainland China; that job is the left to the U.S. Navy.)

Obviously, Western Europe is considerably more powerful and secure than Singapore and Taiwan. But just as obviously, Europe, too, is a beneficiary of the Pax Americana, and the outsize military spending that our overall economic size makes possible. And a world in which America’s economy had grown at European rates since the 1970s would be a very different place — less congenial to our own interests, and probably less stable and prosperous overall — even if our per capita G.D.P. had continued to rise smartly across that period.

What’s more, saying “oh, the economic divergence is all just population growth” doesn’t let Europe’s social democracies off the hook. Obviously enthusiasts for zero population growth would contest this point, but I think that a rich economy’s ability to add people — through both immigration and above replacement-level fertility rates — while maintaining a high standard of living is itself an important indicator of success across a given period. Population growth matters in the short term because it means that you have more people (immigrant and native-born alike) enjoying the fruits of living in a wealthy society. And it matters in the long term because a reasonable demographic balance helps keeps economies vigorous and welfare states sustainable.

Does social democracy depress population growth? Quite probably, yes. There’s a substantial body of evidence suggesting that aspects of the European economic order — from the scope of the continent’s old age pensions (see here, here and here, among other places) to the shape of its labor markets (see chapter 7 in this report, for instance) — have played a significant role in depressing the continent’s fertility. Likewise, America’s more inclusive labor market helps explain why we’ve had much more success than most European nations assimilating newcomers across the last few decades. (Although there are obviously other factors at work as well.)

None of this is to claim that the social democratic model has been a failure. To the contrary, it’s largely been a success story to date. (And none of this is to deny the enormous policy variations within the European Union, either — Sweden’s welfare state is not the same as Spain’s, and so forth.) But America’s more free market model has been a success story as well, one that’s accommodated a much, much faster-growing population and subsidized a system of global security that nearly every nation in the world has benefited from. These are not inconsiderable achievements, and as we contemplate further expansions of government power in this country, they shouldn’t be blithely discounted.

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About

Ross Douthat joined The New York Times as an Op-Ed columnist in April 2009. Previously, he was a senior editor at the Atlantic and a blogger for theatlantic.com. He is the author of "Privilege: Harvard and the Education of the Ruling Class" (Hyperion, 2005) and the co-author, with Reihan Salam, of "Grand New Party: How Republicans Can Win the Working Class and Save the American Dream" (Doubleday, 2008). He is the film critic for National Review.